Reuters: EPA to issue ethanol use targets this summer

June 7, 2013

Ayesha Rascoe, June 5- The Environmental Protection Agency plans to announce targets for U.S. ethanol use in 2013 and 2014 this summer, an EPA official told lawmakers on Wednesday, even as critics of the program warned of a brewing fuel crisis.

The United States is nearing the point where the law will require use of more ethanol than can be physically blended into the fuel supply at the most prevalent level of 10 percent ethanol per gallon.

“When Congress wrote this law, Congress anticipated that the market would solve this problem,” Christopher Grundler, the EPA's director of the office of transportation and air quality, told lawmakers at a House oversight committee hearing.

“Clearly, it has not been resolved,” he said.

Grundler said EPA, which has the authority to lower ethanol use targets or waive them completely, will determine the best way to address the issue of the so-called “blend wall” and will release the targets by the end of summer.

Oil refiners and ethanol producers are waiting the EPA's decision on the targets and Wednesday's hearing took place as the fight over the Renewable Fuel Standard intensified.

The RFS requires rising volumes of biofuels to be blended into U.S. gasoline and diesel supplies. Oil companies warn that the mandate could lead to fuel shortages and raise energy prices for consumers.

Lawmakers have been divided mostly along regional lines on the biofuel mandate. Those from corn-growing states – the majority of U.S. ethanol is produced from corn – support renewable fuel targets, while lawmakers from major oil and gas producing or livestock producing states have urged repeal or reform of the program.

Ethanol producers have blamed the volatility of ethanol credit markets, known as RINS, on opposition to allowing ethanol blends higher than 10 percent at the gasoline pump.